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Last Updated: June 13, 2018
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Headline crude prices for the week beginning 11 June 2018 – Brent: US$74/b; WTI: US$66/b

  • Oil prices held their ground, as dissenting voices within OPEC point to the difficulty of agreeing on an output boost at the upcoming meeting in Vienna.
  • Unofficial requests from the US to key OPEC members to hike output raised eyebrows last week, with Saudi Arabia, Kuwait, the UAE and Algeria looking likely to band together with Russia to push for a supply increase.
  • With Saudi Arabia boosting its daily oil output in May by 162,000 b/d to 10.03 mmb/d – the highest level since October 2017 – individual output rises already look like they are beginning.
  • However, Iraq’s oil minister said that OPEC should not be influenced by pressure to pump more oil, warning that unilateral decisions could lead to the collapse of the fragile alliance within the OPEC group.
  • This complicates matters ahead of the bi-annual meeting in Vienna, with Iraq likely to side with Iran and Venezuela on not raising output, as well as OPEC’s reported refusal to discuss US sanctions on Iran at the meeting.
  • Meanwhile, Venezuela is struggling with a huge crude export backlog, reportedly almost a month behind delivering crude to its customers, putting PDVSA in danger of declaring force majeure on shipments.
  • In the US, growing output in the Permian is causing another bottleneck – labour shortages, with some firms reportedly doubling pay to attract workers.
  • The US active rig count continues to grow, though the rise has been stemmed by the recent fall in crude prices. One new oil and one new gas rig entered service last week, bringing the total number to 1,062.
  • Crude price outlook: A successful initial meeting between North Korea and the US in Singapore should see some political risk abate, but the direction of prices is dependent on whether or not OPEC can come to an agreement. We expect prices to remain steady at US$74-75/b for Brent, and US$64-65/b for WTI.

Headlines of the week


  • Iran and Iraq have begun oil swaps using Kirkuk crude – to be refined in Iran’s Kermanshah and shipped in equal amounts back to Iraq’s southern ports – as Tehran looks for way to circumvent US sanctions with its Arab ally.
  • Qatar Petroleum has bought a 30% in two ExxonMobil subsidiaries in Argentina, gaining access to seven blocks in the promising Vaca Muerta play.
  • ExxonMobil has completed its purchase of half of Equinor’s interest in the BM-S-8 offshore block in Brazil, part of the pre-salt Carcara oil field.
  • Saudi Aramco has raised pricing on key crude grades for Asia to their highest levels since 2014, facing less competition for market share from Iran and Venezuela as well as healthy demand across key markets.
  • Argentina looks set to offer 48 blocks in its first ever upstream licensing round in November, attracting attention from Anadarko, CNOOC and Petronas.
  • Production at the giant Kashagan offshore field in Kazakhstan should hit its target of 370,000 b/d by the end of the year, and could naturally hit as much as 500,000 b/d as partners on the project mull a second development phase.


  • China’s crude oil imports in May eased slightly to 9.2 mmb/d after hitting a record 9.7 mmb/d in April, as key refineries entered maintenance and plants in Shandong were ordered to scale back to ensure blue skies in Qingdao.
  • The new Total-Borealis-NOVA joint venture, Bayport Polymers, has broken ground on its new US$1.7 billion ethane cracker in Port Arthur, Texas. 
  • Vietnam’s second refinery Nghi Son expects to export its first petrochemical shipment this month, entering full operations by August 2018.
  • Kazakhstan is aiming to rival Russia in supplying fuel products to Central Asia following the planned upgrade of its refineries, with the government considering lifting a statewide ban on light oil product exports.

Natural Gas/LNG

  • ExxonMobil and Rosneft have agreed to a capacity of at least 6.2 mtpa for their joint venture US$15 billion Far East LNG project in Sakhalin.
  • The Philippines’ Phoenix Petroleum has agreed to partner with CNOOC to build an LNG import terminal in the country, which is separate from the government’s efforts to establish infrastructure to replace Malampaya gas.
  • Australia’s AIE, together with Japan’s JERA and Marubeni, have proposed building an LNG import terminal at Port Kembla near Sydney to ease the ongoing natural gas supply crunch along Australia’s east coast.
  • Commercial operations at the Golar LNG FLNG project in Cameroon have begun, using an oil tanker reconverted in the Hilli Episeyo FLNG vessel.
  • Poland is aiming to complete the new Baltic Pipe gas pipeline to Norway via Denmark by 2022, as it aims to reduce reliance on Russian gas.
  • Eni is on track to deliver first gas from its operations in Ghana this month, which should be enough to double the country’s national output by year-end.
  • Oil Search has reportedly hit gas at the Kimu 2 wells in the interior of Papua New Guinea, within the target Alene reservoir.


  • India’s private oil retailer Essar Oil has been rebranded as Nayara Energy at a recent meeting of shareholders, as part of a corporate repositioning.

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The United States consumed a record amount of renewable energy in 2019

In 2019, consumption of renewable energy in the United States grew for the fourth year in a row, reaching a record 11.5 quadrillion British thermal units (Btu), or 11% of total U.S. energy consumption. The U.S. Energy Information Administration’s (EIA) new U.S. renewable energy consumption by source and sector chart published in the Monthly Energy Review shows how much renewable energy by source is consumed in each sector.

In its Monthly Energy Review, EIA converts sources of energy to common units of heat, called British thermal units (Btu), to compare different types of energy that are more commonly measured in units that are not directly comparable, such as gallons of biofuels compared with kilowatthours of wind energy. EIA uses a fossil fuel equivalence to calculate primary energy consumption of noncombustible renewables such as wind, hydro, solar, and geothermal.

U.S. renewable energy consumption by sector

Source: U.S. Energy Information Administration, Monthly Energy Review

Wind energy in the United States is almost exclusively used by wind-powered turbines to generate electricity in the electric power sector, and it accounted for about 24% of U.S. renewable energy consumption in 2019. Wind surpassed hydroelectricity to become the most-consumed source of renewable energy on an annual basis in 2019.

Wood and waste energy, including wood, wood pellets, and biomass waste from landfills, accounted for about 24% of U.S. renewable energy use in 2019. Industrial, commercial, and electric power facilities use wood and waste as fuel to generate electricity, to produce heat, and to manufacture goods. About 2% of U.S. households used wood as their primary source of heat in 2019.

Hydroelectric power is almost exclusively used by water-powered turbines to generate electricity in the electric power sector and accounted for about 22% of U.S. renewable energy consumption in 2019. U.S. hydropower consumption has remained relatively consistent since the 1960s, but it fluctuates with seasonal rainfall and drought conditions.

Biofuels, including fuel ethanol, biodiesel, and other renewable fuels, accounted for about 20% of U.S. renewable energy consumption in 2019. Biofuels usually are blended with petroleum-based motor gasoline and diesel and are consumed as liquid fuels in automobiles. Industrial consumption of biofuels accounts for about 36% of U.S. biofuel energy consumption.

Solar energy, consumed to generate electricity or directly as heat, accounted for about 9% of U.S. renewable energy consumption in 2019 and had the largest percentage growth among renewable sources in 2019. Solar photovoltaic (PV) cells, including rooftop panels, and solar thermal power plants use sunlight to generate electricity. Some residential and commercial buildings heat with solar heating systems.

October, 20 2020
Natural gas generators make up largest share of U.S. electricity generation capacity

operating natural-gas fired electric generating capacity by online year

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Based on the U.S. Energy Information Administration's (EIA) annual survey of electric generators, natural gas-fired generators accounted for 43% of operating U.S. electricity generating capacity in 2019. These natural gas-fired generators provided 39% of electricity generation in 2019, more than any other source. Most of the natural gas-fired capacity added in recent decades uses combined-cycle technology, which surpassed coal-fired generators in 2018 to become the technology with the most electricity generating capacity in the United States.

Technological improvements have led to improved efficiency of natural gas generators since the mid-1980s, when combined-cycle plants began replacing older, less efficient steam turbines. For steam turbines, boilers combust fuel to generate steam that drives a turbine to generate electricity. Combustion turbines use a fuel-air mixture to spin a gas turbine. Combined-cycle units, as their name implies, combine these technologies: a fuel-air mixture spins gas turbines to generate electricity, and the excess heat from the gas turbine is used to generate steam for a steam turbine that generates additional electricity.

Combined-cycle generators generally operate for extended periods; combustion turbines and steam turbines are typically only used at times of peak load. Relatively few steam turbines have been installed since the late 1970s, and many steam turbines have been retired in recent years.

natural gas-fired electric gnerating capacity by retirement year

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Not only are combined-cycle systems more efficient than steam or combustion turbines alone, the combined-cycle systems installed more recently are more efficient than the combined-cycle units installed more than a decade ago. These changes in efficiency have reduced the amount of natural gas needed to produce the same amount of electricity. Combined-cycle generators consume 80% of the natural gas used to generate electric power but provide 85% of total natural gas-fired electricity.

operating natural gas-fired electric generating capacity in selected states

Source: U.S. Energy Information Administration, Annual Electric Generator Inventory

Every U.S. state, except Vermont and Hawaii, has at least one utility-scale natural gas electric power plant. Texas, Florida, and California—the three states with the most electricity consumption in 2019—each have more than 35 gigawatts of natural gas-fired capacity. In many states, the majority of this capacity is combined-cycle technology, but 44% of New York’s natural gas capacity is steam turbines and 67% of Illinois’s natural gas capacity is combustion turbines.

October, 19 2020
EIA’s International Energy Outlook analyzes electricity markets in India, Africa, and Asia

Countries that are not members of the Organization for Economic Cooperation and Development (OECD) in Asia, including China and India, and in Africa are home to more than two-thirds of the world population. These regions accounted for 44% of primary energy consumed by the electric sector in 2019, and the U.S. Energy Information Administration (EIA) projected they will reach 56% by 2050 in the Reference case in the International Energy Outlook 2019 (IEO2019). Changes in these economies significantly affect global energy markets.

Today, EIA is releasing its International Energy Outlook 2020 (IEO2020), which analyzes generating technology, fuel price, and infrastructure uncertainty in the electricity markets of Africa, Asia, and India. A related webcast presentation will begin this morning at 9:00 a.m. Eastern Time from the Center for Strategic and International Studies.

global energy consumption for power generation

Source: U.S. Energy Information Administration, International Energy Outlook 2020 (IEO2020)

IEO2020 focuses on the electricity sector, which consumes a growing share of the world’s primary energy. The makeup of the electricity sector is changing rapidly. The use of cost-efficient wind and solar technologies is increasing, and, in many regions of the world, use of lower-cost liquefied natural gas is also increasing. In IEO2019, EIA projected renewables to rise from about 20% of total energy consumed for electricity generation in 2010 to the largest single energy source by 2050.

The following are some key findings of IEO2020:

  • As energy use grows in Asia, some cases indicate more than 50% of electricity could be generated from renewables by 2050.
    IEO2020 features cases that consider differing natural gas prices and renewable energy capital costs in Asia, showing how these costs could shift the fuel mix for generating electricity in the region either further toward fossil fuels or toward renewables.
  • Africa could meet its electricity growth needs in different ways depending on whether development comes as an expansion of the central grid or as off-grid systems.
    Falling costs for solar photovoltaic installations and increased use of off-grid distribution systems have opened up technology options for the development of electricity infrastructure in Africa. Africa’s power generation mix could shift away from current coal-fired and natural gas-fired technologies used in the existing central grid toward off-grid resources, including extensive use of non-hydroelectric renewable generation sources.
  • Transmission infrastructure affects options available to change the future fuel mix for electricity generation in India.
    IEO2020 cases demonstrate the ways that electricity grid interconnections influence fuel choices for electricity generation in India. In cases where India relies more on a unified grid that can transmit electricity across regions, the share of renewables significantly increases and the share of coal decreases between 2019 and 2050. More limited movement of electricity favors existing in-region generation, which is mostly fossil fuels.

IEO2020 builds on the Reference case presented in IEO2019. The models, economic assumptions, and input oil prices from the IEO2019 Reference case largely remained unchanged, but EIA adjusted specific elements or assumptions to explore areas of uncertainty such as the rapid growth of renewable energy.

Because IEO2020 is based on the IEO2019 modeling platform and because it focuses on long-term electricity market dynamics, it does not include the impacts of COVID-19 and related mitigation efforts. The Annual Energy Outlook 2021 (AEO2021) and IEO2021 will both feature analyses of the impact of COVID-19 mitigation efforts on energy markets.

Asia infographic, as described in the article text

Source: U.S. Energy Information Administration, International Energy Outlook 2020 (IEO2020)
Note: Click to enlarge.

With the IEO2020 release, EIA is publishing new Plain Language documentation of EIA’s World Energy Projection System (WEPS), the modeling system that EIA uses to produce IEO projections. EIA’s new Handbook of Energy Modeling Methods includes sections on most WEPS components, and EIA will release more sections in the coming months.

October, 16 2020